Unpacking the Myths of Financial Aid

This is part of an ongoing series of printable pamphlets designed to explain how money flows through public research universities in general and the University of Michigan in particular. The pamphlets are intended to clarify arguments and push back against pervasive and seemingly “common sense” narratives about the crisis of public higher education that impede, rather than advance, meaningful political action. We hope tactics and strategies will emerge from these counter-narratives—after all, we can’t fight what we don’t understand. Download the printable version of this pamphlet here and see the Resources page for the entire series.

Like many public research universities around the country, the University of Michigan has raised tuition significantly over the past two decades. But administrators argue that in the end tuition hikes don’t make it harder for low-income students to attend.[1] Through financial aid, they claim, the high tuition paid by wealthier students who can afford it is used to offset tuition for lower income students. The argument is that the “high tuition/high aid” model works like a kind of progressive taxation, so paradoxically what those who criticize the university’s high tuition are in fact advocating is punishing the poor.

Class Composition Pie Charts

Unfortunately, the administration’s theory has some serious problems. It is true that the poorest students at U-M receive excellent financial aid packages made up primarily of grants instead of loans or work-study, which means they aren’t forced into debt or exploited to pay tuition. However, the number of students who meet these qualifications is steadily decreasing in both absolute terms and relative to the entire student body. Looking at the class composition of the student body, we can see some major changes over the past 15 years. Between 1997 and 2010, the percentage of the student body whose family income is under $75,000 a year dropped from 38.5% to 26.5% (a decrease of 12%), while the percentage whose family income is over $200,000 a year rose from 14.8% to 27.6% (an increase of 12.8%).[2] The growth in the richest sector of students was so significant that they actually added an extra income category to the list—instead of the maximum being $200,000 and above, they bumped it up to $250,000 and added another in between. The latest data only confirm this trend. As of 2014, a full 31% of admitted students have a family income of $200,000 and above.[3] These changes in the socioeconomic status of the student body have also intensified the ongoing exclusion of underrepresented minority students on campus. The implication is that even as the university brings in more tuition money—and therefore, according to the “high tuition/high aid” model, more aid—the number of students who actually need this aid is shrinking significantly.

decline in grants

This problem is further compounded by another aspect of financial aid management. Public universities around the country are dedicating ever greater portions of their financial aid resources to “merit” aid, rather than “need-based” aid. In other words, less and less financial aid is going to low income students who truly need it. A recent exposé published by ProPublica tracks the decline in grants to low-income students between 1996-2012, and as the following graph shows this trend continued even through the financial crisis of 2008, which hit lower income brackets hardest.[4] Likewise, a recent report from the New America Foundation specifically highlights the University of Michigan’s record on financial aid as “disappointing.” Even as the percentage of students with financial need is decreasing, U-M is dedicating more and more money to financial aid. In 2010-2011, the university gave “merit” scholarships averaging $6,000 per student to 46% of its freshman class.[5]

Why would the university award aid in this way? Couldn’t it just adjust the ratio of merit aid to need-based aid? Unfortunately, the “high tuition/high aid” model only “works” when it’s organized like this. That’s because, for many university administrators, financial aid is not so much a form of charity as it is an instrument for maximizing tuition revenue. If that seems hard to believe, consider a recent article published in Forbes magazine about a new trend in the field of higher education finances: “financial aid leveraging.”[6] While in the past university executives thought of financial aid strictly as an expense, as public universities search for new sources of revenue they have begun to see it as a way of boosting not only the university’s prestige but also its tuition revenue. According to this new decision calculus, for example, they might choose to give “four well-heeled applicants with high SAT scores a 10% discount from its $50,000 tuition—rather than give one high-achieving, lower-income applicant the $20,000 scholarship she needs. The award of an extra $5,000 to rich kids might provide an ego boost that moves the needle—and bring in four students sure to pay the remaining $45,000 each year. That same $20,000 generated an additional $150,000 in relatively stable net tuition revenue.” Nicholas Hillman, a professor of education at the University of Wisconsin, put it this way in a 2012 article published in the academic journal Research in Higher Education: “By enticing students and their associated tuition dollars to enroll, colleges can strategically leverage aid to maximize (or at least enhance) the amount of net tuition revenue generated per aided student.”[7]

By following this model, the financial managers at the University of Michigan have decided to leverage financial aid dollars to craft a student body made up of increasingly wealthy and white students while at the same time bringing in as much unrestricted revenue as possible. From their perspective, the “high tuition/high aid” model is a complete success. For those of us who do not want to see another public university transformed into a privatized, profit-seeking institution, however, it has failed. In the corporate university, financial aid has become just another tool of privatization and exclusion.

1. The administration has put together a slick new website focused on challenging the “myths and misconceptions” of financial aid. Unfortunately, it leaves out the information we present here. Also see University of Michigan Public Affairs, “Understanding Tuition,” June 2014.
2. See CIRP’s “University of Michigan Student Profile Ten-Year Comparison” for 1997-2007 and 2000-2010 for the data used in this analysis.
3. For the most recent data, see SUM, “How Different is the Public University of Michigan from the For-Profit University of Phoenix? Ask Tim Slottow,” April 6, 2014.
4. Marian Wang, “Public Universities Ramp Up Aid for the Wealthy, Leaving the Poor Behind,” ProPublica, September 11, 2013.
5. Stephen Burd, “Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind,” May 2013, p. 24.
6. Maggie McGrath, “The Invisible Force Behind College Admissions,” Forbes, July 30, 2014.
7. Nicholas W. Hillman, “Tuition Discounting for Revenue Management,” Research in Higher Education 53 (2012), p. 264.

Download the pamphlet for printing: Unpacking the Myths of Financial Aid PDF

Civility and Racism at the University of Michigan

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University administrators have recently become obsessed with “civility,” using the buzzword as everything from clumsy justifications for an unethical firing of a tenured professor to a form of censorship used to restrain student activism. In the last few weeks, we’ve seen earnest statements issued by top executives at the University of Illinois at Urbana-Champaign, Berkeley, Penn State, Ohio University, and our very own University of Michigan. We’ll get to our beloved President Schlissel in a second but first, let’s rewind.

You’ve probably heard about the case of Steven Salaita, a tenured professor at Virginia Tech who was recently offered a tenured position at Univeristy of Illinois, Urbana-Champaign. He accepted the offer, and he and his partner resigned from their old jobs, rented a new apartment, and moved across the country with their kid. Then, about a week before the semester was supposed to start, the Chancellor of UIUC, Phyllis Wise, wrote Salaita an email saying she had decided not to forward the paperwork to the Board of Trustees, which is generally considered an automatic, rubber-stamp step in the process. In effect, the chancellor unilaterally fired (or “un-hired”) him. Apparently, a series of tweets in which Salaita had criticized Israel’s latest attack on Gaza had offended Israel supporters.

Students and faculty around the country have responded with outrage. Internal emails acquired through a FOIA request have revealed that the administration and trustees were targeted by a pro-Israel, anti-Salaita media campaign. Many of these emails used the exact same wording, suggesting not a grassroots campaign but a centrally-organized attack that had distributed specific talking points from on high. There were also emails from major donors, declaring that they would stop giving money to the university if the Salaita hire was confirmed. In other words, the administration of this public university caved under the financial pressure of wealthy donors and acceded to their fundamentally racist demands.

While these emails have made it clear what was going on in the background, Chancellor Wise insists that Salaita was not fired for his criticism of Israeli policy. Rather, she claimed in a message to the university community, it was because of his lack of “civility”:

What we cannot and will not tolerate at the University of Illinois are personal and disrespectful words or actions that demean and abuse either viewpoints themselves or those who express them. We have a particular duty to our students to ensure that they live in a community of scholarship that challenges their assumptions about the world but that also respects their rights as individuals.

As chancellor, it is my responsibility to ensure that all perspectives are welcome and that our discourse, regardless of subject matter or viewpoint, allows new concepts and differing points of view to be discussed in and outside the classroom in a scholarly, civil and productive manner.

As many critics have argued, this statement is completely absurd—do you really want to argue that there is no “viewpoint” that can be demeaned? (Not even, say, institutionalized racism like segregation or racial profiling? More on this below.) Overall, it seems clear that “civility” is being used here as a “discourse of power.” But it’s also important to consider the reason behind this power grab: the UIUC administration is attempting to secure the right to police the speech of campus faculty in order to more effectively capture private funding from donors. We’ve written before about how the increasing reliance on private donations makes the public university less democratic by subjecting it to the whims of rich individuals, and this is a perfect example of that process.

Strangely, since the UIUC administration’s statement on Salaita and “civility,” similar declarations have begun to appear at universities around the country. Most of these statements look more or less like the UIUC one and their timing suggests that administrations around the country see the need to exercise new forms of control on faculty speech, especially when it comes to social media. All these “civility” statements make it seem like administrators are acting in solidarity with each other—and against their faculty.

At the University of Michigan too “civility” has come to serve as a form of censorship. During his inaugural speech delivered on September 5 in the context of the Salaita firing, U-M’s incoming president Mark Schlissel called, much like UIUC Chancellor Wise and others, for a university “where we all become advocates for, and experts in, civil discourse.” But where other administrators have used “civility” as to control faculty speech, Schlissel is trying to control the actions of students, especially student protesters.

Schlissel lists a series of public figures who were scheduled to give commencement addresses at universities over the past year, including Condoleezza Rice (who helped orchestrate the Iraq war), Christine Lagarde (the head of the IMF), and Robert Birgeneau (ex-Berkeley chancellor who sent riot cops to beat student protesters during Occupy Cal). In each case, students used a variety of tactics, from petitions and public letters to interruption, to protest these speeches. Why, they demanded, should we be forced to listen to these people who, through their speech and actions, are responsible for harming people around the world? In his speech, Schlissel emphasizes the inconvenience and discomfort these figures faced in response to the protests but never touches on the serious implications of having these people speak at a public university.

To this Schlissel adds his personal experience as Provost at Brown University, where last year a coalition of students of color and community members interrupted a speech by Ray Kelly, the former police commissioner of New York who institutionalized racial profiling under stop-and-frisk and oversaw a massive surveillance program targeting Muslims. As Doreen St. Felix, one of the organizers of the protest, wrote at the time,

…stop-and-frisk is not just an idea. Racial profiling is not an intellectual puzzle to be spread across the table. Stop-and-frisk is a politically sanctioned system of police brutality, and one of the most conservative institutions in the US—the justice system—deemed it unconstitutional. We are committed to conversations, but until we work to change the inequality embedded in how they currently are carried out, as Brown Professor Tricia Rose urged in the university forum last night, we as a society will not be engaging in true and “free” political speech…

But President Schlissel defends this institutionally-supported racism. Not only should these students not have interrupted NYPD Commissioner Kelly’s speech, he continued, but they should have listened respectfully to his racist hate speech. Schlissel applauds U-M’s response to Ross Barnett as a model for student behavior. Barnett was the governor of Mississippi and an avowed segregationist who opposed civil rights legislation. Despite his staunch racism, he was apparently invited to give a speech here at U-M in 1963. From the institutionalized racism of Jim Crow to the institutionalized racism of mass incarceration and racial profiling today, Schlissel thinks that students should not resist but just sit quietly and listen.

You read that right. In his inaugural speech, Schlissel specifically defended a segregationist politician’s right to speak in the interest of “civility.” A politician who sought specifically to ban black students from the University of Mississippi. And this at a campus that became a site of dynamic anti-racist activism last year, when the #BBUM campaign and the sit-in at the undergraduate library brought national attention to the racism and microaggressions experienced by black students and other students of color at this university and universities across the country.

What goes completely over Schlissel’s head are the historical and political connotations of “civility.” Whenever white men in positions of power insist on remaining “civil” during a discourse, they are not speaking of objective rationale and a reasoned debate but of a highly censored environment in which their opinions and actions are the only ones deemed legitimate and any deviation is deemed uncivil and therefore inappropriate. They are actively invalidating the struggle and argumentation of the oppressed by implying that speaking out against the dominant system of power is inherently vulgar.

In Schlissel’s world, Salaita’s criticism of Israel’s mass murder of women and children is unacceptable, but granting public spaces for the likes of Ray Kelly and Ross Barnett to spew vitriol and hatred is “encourag[ing] all voices, no matter how discomforting the message.”

As this contrast reveals, the concept of “civility” is often used to marginalize people of color (especially women of color) by labeling them as naturally “irrational,” “threatening,” and even “violent.” Many critics have noted how the Salaita case demonstrates that administrators around the country, from Berkeley to Urbana-Champaign, are perpetuating these exclusionary discourses in order to neutralize any faculty speech that might jeopardize their private revenue streams. But what President Schlissel’s comments add to the “civility” discussion is its application to student protesters, particularly students of color. If Chancellor Wise’s statement about civility limits the promise of academic freedom for faculty, President Schlissel seeks to constrain the political activities of students, particularly students of color. But given the resistance of students on campus last year, we don’t think he’ll succeed.

(Photo by @MPowered)